In the past 24 hours, the cryptocurrency market has once again experienced a round of market-wide decline against the backdrop of a lack of significant positive news and a relatively cold macro environment. Bitcoin dropped to $93,005 during trading, breaking through multiple support levels in a short time, essentially giving back all gains since the beginning of the year; Ethereum dipped to a low of $3,004; mainstream assets like BNB, SOL, and ADA also retraced by 3%–6%; small and medium-cap altcoins generally fell by 8%–10%, showing a clear acceleration in the decline. From the surface phenomena of the market, this seems like a routine correction, but if we delve into the flow of funds, trading structure, and emotional aspects, we will find that deeper structural changes are occurring behind this round of decline.

This is not simply a "price pullback," but more like a "risk appetite reset." In the past few weeks, in the absence of new narrative drivers, the market has relied on existing funds to repeatedly speculate, leading to excessive rises in some small coins and high-risk assets. When there is a slight disturbance in the macro environment or Bitcoin shows signs of fatigue, funds quickly begin to withdraw from high-volatility assets and flow back into deep pools of BTC, ETH, and stablecoins, forming a typical migration from the risk end to the defense end. In other words, the market is not in panic; rather, it is reallocating risk exposure from outer assets to core assets, which is a typical structural de-risking process.

Such fund behavior is not uncommon in traditional financial markets, especially during liquidity tightening cycles—when investors believe it is difficult to achieve excess returns in the short term, they tend to return to more certain assets to reduce volatility risk. Therefore, the decline itself is not frightening; what is truly important is that funds are retelling a story of "risk repricing."

The core issue with Bitcoin: it’s not about how much it drops, but that the upward momentum has been completely interrupted. This round of Bitcoin's decline did not occur due to a single significant event but is the result of multiple overlapping factors, with the underlying logic being more critical than the simple price performance.

First, the prolonged high-level consolidation has led to obvious fatigue among bulls. Over the past month, Bitcoin has repeatedly failed to break through the $98,000–$100,000 range, with the market frequently experiencing a rhythm of "rally—pullback—volume increase—further pullback," shifting expectations from "new highs" to "deep pullbacks cannot be ruled out," prompting high-level holders to actively reduce their positions.

Second, slight tightening signals in macro liquidity have also affected sentiment in the crypto market. The rise in U.S. Treasury yields and the strengthening of the dollar index have caused some long-term institutional funds to temporarily return to traditional safe-haven assets, reducing exposure to high-volatility markets. When the macro backdrop weakens, the crypto market often reacts ahead of other assets.

Third, the derivatives market triggered a chain reaction of deleveraging. Recently, the open interest in BTC perpetual contracts has been accumulating, and after multiple failed attempts to rally, the risk of leveraged positions has rapidly built up. During this decline, many long positions hit liquidation and forced selling prices, accelerating the speed of the drop and even leading to large sell orders in a short time, further pushing down market prices. This is also why a seemingly calm macro backdrop can amplify price volatility.

It is worth emphasizing that this round of decline does not mean Bitcoin has lost its long-term trend. The on-chain long-term holding ratio remains high, the scale of institutional inflows has not significantly decreased, and ETF funds continue to maintain net inflows, albeit at a slower growth rate. In other words, the core issue with BTC's decline is not where the price drops to, but that "short-term upward momentum has temporarily failed," and the market is waiting for the next trend catalyst, such as a warming macro environment, large-scale ETF inflows, or a return of on-chain activity to high levels.

Why has Ethereum been able to hold above $3,000? It is supported not by sentiment, but by structural demand. Unlike Bitcoin's passive pullback, Ethereum's performance is more resilient. Although ETH has also weakened with the market, its decline is noticeably smaller than BTC's, and its bottom support is more solid. Its strength does not come from speculative buying but from genuine structural demand on-chain.

First, the "value capture ability" of the Ethereum ecosystem continues to strengthen. Narratives such as L2, Restaking, DeFi, and RWA have driven a steady increase in on-chain interaction frequency, with substantial actual usage demand leading to continuous on-chain gas consumption, indicating that ETH still possesses the ability to be "consumed and locked" within the ecosystem.

Second, the presence of strategic and arbitrage trading keeps ETH's selling pressure relatively controllable. Unlike small coins that are primarily driven by retail sentiment, the ETH ecosystem has a large number of bot strategies, institutional arbitrage, and high-frequency market-making, which tend to provide liquidity steadily during price fluctuations rather than concentrating on selling during panic. This type of structural capital forms a natural support to some extent.

This is also why ETH, even if it briefly declines with BTC, often stabilizes more quickly. Conversely, once BTC shows a clear rebound, Ethereum often becomes one of the mainstream assets that strengthens first and to a greater extent. In other words, ETH's resilience comes from genuine demand in the ecosystem, not from short-term emotional "support."

The market has entered a defensive period: altcoins are broadly declining, risk appetite is contracting, but the overall structure still belongs to a "healthy turnover." The altcoin sector is the most obvious "weak area" in this round of decline. Tokens like GIGGLE, F, PARTI, PHA, and ICP have generally fallen by 8%–10% in 24 hours, with some trading pairs even experiencing instantaneous liquidity gaps. This phenomenon is not sudden but a typical result of reshaping risk appetite.

Altcoins are highly dependent on market sentiment; when confidence is strong, small coins often rise the most; but when risk appetite declines, they also become the first assets to be abandoned. The structural characteristics of small market caps and low depth mean that once funds leave, small coin prices will experience rapid volatility. However, importantly, the sharp decline in altcoins does not indicate that the market has entered systemic panic.

On-chain data, on the contrary, shows a different picture:

• DeFi TVL is steadily increasing, with no large-scale withdrawals;
• L2 activity remains in a healthy range, with no significant user exits;
• The long-term holding ratio of mainstream assets continues to grow, indicating that long-term funds are still increasing their holdings of core assets;
• The liquidity of stablecoin pools remains loose, with no signs of a run or price decoupling.

This indicates that the market is undergoing a "healthy turnover"—funds are withdrawing from the risk end and returning to certain assets, allowing bubbles to be squeezed, leverage to be cleared, and chips to be redistributed. This reset is often positive for future market conditions.

As long as BTC can stabilize in the $91,000–$94,000 range, this round of adjustment will constitute the most important "chip reset period" before the end of the year. Historically, strong trending markets often welcome the next trend after similar deep fluctuations.

Related: Nick Szabo: Bitcoin (BTC) is not a "magical anarcho-capitalist Swiss Army knife."

Original article: “Bitcoin (BTC) sheds year-to-date gains as $93,005 support breaks! Structural risks are squeezing your altcoin positions”

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